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23 Aug
2019

Computing equivalent units and assigning costs | Good Grade Guarantee!

P16a-19b
Computing equivalent units and assigning costs to completed units and ending with inventory; two materials, added at different parts; no beginning inventory or cost transferred.
Roots exteriors produces exterior siding for homes. The preparation department begins with wood, which is chopped into small bits. At the end of the process an adhesive is added. Then the wood/adhesive mixture goes on to the compression department where the wood is compressed into sheets. Conversion costs are added evenly throughout the preparation process. March data for the preparation department are as follows (in millions)
sheets
beginning work in process inventory= 0 sheets
started production= 3,300 sheets
completed and transferred out to compression in march= 1,900 sheets
finding work in process inventory (45% of the way through the preparation process) 1,400 sheets
Costs
beginning work in process inventory =$0
costs added during march:
wood=$2600
adhesives=$1365
direct labor=$640
manufacturing overhead=$2445
total costs=$7050
1. draw a time line for the preparation department
2. use the time line to help you compute the equivalent (hint: each direct material added at a different point in the production process requires its own equivalent-unit computation)
3. compute the total costs of the units (sheets)
a. completed and transferred out to the compression department
b. in the preparation departments finding work in process inventory.
4. prepare the journal entry to record the cost of the sheets completed and transferred out to the compression department.
5. post the journal entries to the work in process inventory-preparation T-account. what is the ending balance.

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